BREIT 2017 Annual Report

75 During the period March 2, 2016 (date of our initial capitalization) through December 31, 2016 we incurred $115 thousand of General and Administrative Expenses. Such costs related to legal, accounting, board of directors fees and other corporate services. Management Fee In accordance with our Advisory Agreement, we began accruing the management fee beginning on July 1, 2017 based on our monthly NAV, as the Adviser had waived the management fee for the period January 1, 2017 through June 30, 2017. During the year ended December 31, 2017, the total management fee expense was $8.9 million. Performance Participation Allocation For the year ended December 31, 2017, the performance participation allocation was $17.0 million, as a result of the total BREIT return being greater than the 5% hurdle amount. Such amount was allocated to the Special Limited Partner. The performance participation allocation is measured annually and any amount earned by the Special Limited Partner becomes payable as of December 31 of the applicable year. The $17.0 million in performance participation allocation for the year ended December 31, 2017 was settled in January 2018 with the issuance of approximately 1.6 million Class I units in BREIT OP to the Special Limited Partner as payment for the 2017 performance participation allocation. Depreciation and Amortization For the year ended December 31, 2017, depreciation and amortization expenses were $121.8 million, driven by depreciation and amortization on our investments in real property. Income from Real Estate-Related Securities For the year ended December 31, 2017, income from real estate-related securities was $17.7 million, which consisted of interest income of $15.5 million and mark-to-market gains of $2.4 million, partially offset by a realized loss of $0.2 million on our investments in real estate-related securities. Interest Income For the year ended December 31, 2017, interest income was $0.5 million, which consisted of the interest earned on the cash deposited in a money market account. Interest Expense For the year ended December 31, 2017, interest expense was $36.9 million, which consisted of the interest expense incurred on our mortgage notes, term loans, revolving credit facilities, Line of Credit and borrowings under our repurchase agreements. Liquidity and Capital Resources Our primary needs for liquidity and capital resources are to fund our investments, make distributions to our stockholders, repurchase shares of our common stock pursuant to our share repurchase plan, pay our organization and offering costs, operating expenses, capital expenditures and to pay debt service on any outstanding indebtedness we may incur. We anticipate our operating expenses will include, among other things, the management fee we pay to the Adviser (to the extent the Adviser elects to receive the management fee in cash or requests that we repurchase shares previously issued to the Adviser for payment of the management fee), the performance participation allocation that BREIT OP pays to the Special Limited Partner (to the extent the Special Limited Partner elects to receive the performance participation allocation in cash or requests that we repurchase shares previously issued to the Special Limited Partner for payment of the performance participation allocation), general corporate expenses, and fees and expenses related to managing our properties and other investments. We do not have any office or personnel expenses as we do not have any employees. Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt.